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The news is not good: increased use of the cloud can triple a company’s chances of incurring a $20 million data breach. That’s according to research released on Wednesday by Ponemon Institute and cloud security firm Netskope.

The results of the study, “Data Breach: The Cloud Multiplier Effect,” indicate that IT and security professionals expect that moving their apps to the cloud will increase the potential that their companies will be hit by data breaches. And that means they’ll be on the hook for millions to clean up the mess.

Ponemon asked the 613 IT and security pros it surveyed in March to estimate the likelihood of a data breach involving 100,000 or more records at their organizations under current circumstances and how using more cloud services would change that probability. According to the report, an increased use of cloud services would triple the odds of a data breach.

Cost of a Data Breach

This report draws from Ponemon Institute’s May 2014 “Cost of a Data Breach” study that established a cost of $201.18 per lost or stolen customer record. So for a data breach involving 100,000 or more customer records the cost would be just over $20 million.

“Imagine then if the probability of that data breach were to triple simply because you increased your use of the cloud. That’s what IT folks are coming to grips with and they’ve started to recognize the need to align their security programs to account for it,” said Sanjay Beri, CEO and founder of Netskope.

Beri said that while there are many enterprise-ready apps available today, IT and security practictioners are worried about the damage from risky apps. “Rewriting this story requires contextual knowledge about how these apps are being used and an effective way of mitigating risk,” he added.

Vote of No Confidence

Across the board, the survey respondents said they believed that their corporate and customer data are less secure when the use of cloud services increases. Additionally, the IT and security professionals said their networks were running cloud services unknown to them; they were not aware of the security practices of their cloud service providers; and they believed that their organizations were not paying enough attention to deploying and monitoring security programs. What does that all mean? The general perception is that the probability of a data breach is increasing in today’s IT environment, according to the report.

One Will Get You Three

Respondents estimated that every 1 percent increase in the use of cloud services will result in a 3 percent higher probability of a data breach, meaning an organization using 100 cloud services would only need to add 25 more to increase the likelihood of a data breach by 75 percent.

More than two-thirds (69 percent) of respondents believed that their organizations are not proactive in assessing information that is too sensitive to be stored in the cloud. Sixty-two percent of respondents indicated that the cloud services their companies are using are not thoroughly vetted for security before deployment.

Almost three-quarters (72 percent) of respondents believed their cloud services providers would not notify them immediately if they had data breaches involving the loss or theft of their intellectual property or business confidential information. And 71 percent believed they would not receive immediate notifications following breaches involving the loss or theft of customer data.

The IT and security professionals surveyed said they believed 45 percent of all software applications used by their organizations are in the cloud, but IT did not have visiblity into exactly half (22.5 percent) of these applications. In addition, although the respondents estimated that 36 percent of business critical apps are based in the cloud, they said IT lacked visibility into nearly half of them.

WittZi nails it. The benefits to cloud-based software far outweigh any cons and the fact is that there's no security related concerns to the cloud that don't apply to on premise solutions as well.

What this article should highlight instead is the need to hold third-party software to a higher security standard, and any cloud vendor your business leverages will fall into this category.

Chris Wysopal from Veracode explains this in a recent blog post here: http://blog.veracode.com/2014/06/cloud-or-not-third-party-software-adds-unnecessary-risk/

WittZi:

Posted: 2014-06-10 @ 1:55am PT

I think that this is the opionion of dinosaurs. Cloud hosting companies are often (note, almost certainly!) specialists at securing their infrastructure against attack, versus a (frquently) inept internal IT department that would admittedly struggle in a similar environment.

I dont have time to find the article, but if you look at cloud data breaches in 2012 vs internally hosted data breaches, the internal systems are breached significantly more frequently.

The study is based on people's views; people often with a vested interest to keep their systems in-house. I think that this is a very misleading study indeed.

James:

Posted: 2014-06-06 @ 3:49am PT

Interesting analysis, cyber crime is increasing and its time organizations adopt stronger measures to check security breaches. Regular checks on security systems and a requirements analysis should be a part of the business plan to check these threats. I work for McGladrey and there's a whitepaper on our website on cyber security which will interest readers . @ “Two common Web application attacks illustrate security concerns” @ http://bit.ly/1c0f35M